IMF will seek to know revenue impact of anti-graft drive

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Shakahwat Hossain
The International Monetary Fund (IMF) will discuss a number of issues with government officials during the forthcoming visit of its team to Dhaka.
The Washington-based multilateral lending agency will like to know from the government about the revenue impact of its on-going anti-corruption drive and the projection thereof for the current fiscal.
Other issues, which would come up for discussions in the meetings will include the planned changes in land valuation and projected revenue collection, subsequent to such changes, in the current fiscal, government plans to expedite the process of implementing projects under the Annual Development Programme (ADP) and financial operational improvements of the loss-making Bangladesh Petroleum Corporation (BPC).
The IMF team to be led by Asia Pacific adviser Thomas Rumbough is scheduled to visit the capital from September 4-18 to initiate discussions with the present government on a 'possible successor' to the Poverty Reduction Growth Facility (PRGF) arrangement, sources added.
The country is finalising the signing of a fresh agreement with IMF-Policy Support Instrument (PSI)- after the PRGF expired June last. Unlike the PRGF, the IMF will only review the country's economy under the PSI that will send signals to other donor agencies.
Besides, the IMF will also focus on the flood and government plans on post-flood rehabilitation strategies, apart from other issues.
It would specially like to know whether the government required any additional external fund beyond the budgetary assistance to recoup the losses caused by this year's flood.
"Is any additional external financing expected beyond what was already in the budget on account of the recent flood," IMF raised this question in its paper that has more than a dozen points for discussions.
The government has already sought US$ 150 million additional budgetary assistance from the donor countries and agencies at a meeting with local consultative group (LCG).
It needs the fund to help achieve the projected growth rate and maintain macroeconomic stability, following a major shock that the economy has received from the current floods.
The government has diverted budgetary allocation equivalent to 0.8 per cent of the gross domestic product (GDP) to recoup the losses caused by the flood.
Without the additional fund, the government will have to depend on excessive local borrowing, which will fuel inflation, slow down private sector investment and its growth and affect implementation of ADP, competent sources said.
Another issue of consequence to come up in discussions with the IMF team will relate to review of overall public expenditure in the current fiscal.
In this connection, the ADP implementation has become a major cause of concern for the government as a substantial part of the revised ADP could not be implemented last year.
The last IMF mission visited the capital in connection of the PRGF April last.
Under the PRGF, the country was to receive $590.7 million that included $78.7 million under Trade Integration Mechanism (TIM) credit. The Fund released about US$467.4 million until October 2006 in five PRGF installments. It, however, did not release the sixth PRGF installment.